Coupang falls after Q2 product commerce revenue is lower than expected

Coupang (NYSE:CPNG) traded lower in early action on Wednesday after posting a mixed Q2 earnings report. Revenue rose 25.3% year-over-year, but fell short of the consensus estimate by $70 million. Excluding Farfetch, the revenue growth was 18% year-over-year on a reported basis and 23% on an FX-neutral basis. Gross profit increased 41% Y/Y during the quarter to $2.1 billion. Excluding Farfetch, gross profit was $1.9 billion, growing 27% Y/Y, and the gross profit margin rate was 28.3%.

Mizuho Securities noted that Coupang (CPNG) management maintained revenue guidance in low 20’s for FY24 and EBITDA losses for developing offerings at $650 million. That gave the firm increased confidence in its FY26 estimate at $3.1 billion, and it maintained its price target at $23. Mizuho’s rating on Coupang (CPNG) is Neutral due to valuation premium, regulatory uncertainty, and Softbank headwinds, but the firm is incrementally positive about the e-commerce company’s category leading position.

Morgan Stanley stayed with an Overweight rating on Coupang (CPNG) following the earnings release. The firm highlighted that while product commerce revenue did fall slightly short, it sees this reflecting higher 3P mix rather than growth concerns.

During the earnings call (transcript), Coupang (CPNG) executives talked in detail about the Farfetch integration.

“On Farfetch, as we stated last quarter, our goal is to generate close to positive adjusted EBITDA on a run rate basis by the end of the calendar year. We’re executed to plan and are on track to achieve these goals for the year so far. Though we’re still in the very early stages of our journey.”

“It’s important to highlight that in the markets we serve, we see massive potential that is still largely untapped. And our strategy to capture that potential has been unwavering. Disciplined investment and operational excellence to deliver customer WOW, the best selection, service and savings for our customers. We believe to our core that the happiness of our customers is the key to maximizing opportunities in the long term for our suppliers, merchants, employees, and shareholders.”

Shares of Coupang (CPNG) were down 2.37% in premarket action to $20.67.